Microsoft Xbox Plans Second Round of Layoffs, Studio Consolidations

Microsoft's Xbox division is set to initiate a second wave of layoffs this week, with hundreds of employees expected to be affected, according to sources cited by The Information. The company is also planning to consolidate several of its game studios.

This development comes after Xbox laid off 1,600 employees in July. At that time, CEO Asha Sharma informed staff that an additional 1,600 positions would be eliminated by the end of the year. Concurrently, Xbox divested four of its subsidiary game studios.

The current layoffs and restructuring are part of Sharma's initiative to improve Xbox's profit margins, as the gaming division's profitability continues to lag behind competitors. The strategy involves concentrating more resources on developing new titles for flagship franchises such as "The Elder Scrolls" and "Fallout," while scaling back operations at smaller studios acquired in recent years.

Since taking the helm of Xbox earlier this year, Sharma has been actively reorganizing the business. The Information previously reported discussions between Microsoft CEO Satya Nadella and CFO Amy Hood regarding a potential restructuring or even a spin-off of the Xbox business. More recently, both executives have reportedly backed Sharma's reform proposals.